CAMS Exam Dumps - Certified Anti-Money Laundering Specialist (CAMS7 the 7th edition)

FIUs rely on formal cooperation mechanisms to exchange information lawfully and efficiently across borders. One of the most widely used mechanisms is a Memorandum of Understanding (MOU) between FIUs in different jurisdictions.

MOUs establish the terms, scope, confidentiality protections, and procedures for sharing financial intelligence. They enable FIUs to exchange information directly, quickly, and securely while respecting data protection and domestic legal requirements. This structure significantly reduces bureaucratic delays and supports effective cross-border investigations.

FATF and regional bodies are standard-setters and evaluators, not operational information-sharing hubs. The Wolfsberg Group is a private-sector association and does not facilitate FIU-to-FIU communication. MLATs are used primarily by law enforcement and judicial authorities for criminal proceedings and arrests—not for FIU intelligence exchange.

Therefore, MOUs are the correct and most appropriate mechanism for FIU cooperation.

Correspondent banking relationships are recognized as higher risk under FATF guidance primarily because transactions are cross-border and conducted on behalf of third-party customers.

In correspondent banking, a respondent bank may process transactions for customers that the correspondent bank does not have a direct relationship with. This reduces transparency and limits the correspondent’s ability to fully assess customer identity, beneficial ownership, and transaction purpose.

While correspondent transactions may involve high-risk jurisdictions, this is not always the case. They are not anonymous by design, and payment messaging standards often require significant information. However, the indirect customer relationship and cross-border nature introduce complexity, jurisdictional risk, and reliance on the respondent bank’s controls.

Therefore, third-party and cross-border exposure is the key driver of heightened risk.

United Nations Security Council (UNSC) sanctions are a key international tool established under Chapter VII of the UN Charter. Their primary purpose is to maintain or restore international peace and security, not to punish states or provide economic advantage.

Sanctions may include asset freezes, travel bans, arms embargoes, or targeted measures against individuals and entities. These measures are designed to influence behavior, prevent escalation of conflict, and support diplomatic solutions.

The use of force is separate from sanctions and requires explicit authorization. Sanctions are not intended to be indefinite and are regularly reviewed and adjusted based on effectiveness and humanitarian considerations.

While sanctions may exert pressure on governments or actors, they are not intended as punitive measures but as preventive and corrective tools aligned with international law.

Money Services Businesses (MSBs)are commonly recognized by regulatory and supervisory authorities as havinghigher inherent AML/CFT risk, particularly due to certain business characteristics.

Option B – The prevalence of international wire transfers:

MSBs often facilitatecross-border transactions, which present a higher money laundering and terrorist financing risk due to challenges in verifying customer identity, the origin of funds, and the end destination—especially when dealing with higher-risk jurisdictions.

Option D – The cash-intensive nature of the services offered:

Many MSBs deal primarily incash, which increases the risk ofanonymous transactionsandfunds layering, making it harder to trace illicit activity. Cash is the most vulnerable medium for placement of illicit funds into the financial system.

Option AandOption E, while involving modern technologies,can actually reduce riskwhen implemented with proper controls (e.g., secure digital onboarding and traceable payments enhance auditability).

Option Cdoes not in itself signal high AML risk unless combined with other red flags.

Virtual Asset Service Providers (VASPs) are considered higher-risk customers due to their exposure to anonymity, speed, and cross-border transactions. FATF guidance highlights several red flags indicative of potential money laundering activity.

The use of shell companies to move funds into and out of a VASP is a strong indicator of attempts to conceal beneficial ownership and obscure transaction flows. Similarly, frequent use of mixers and tumblers is a well-recognized technique used to break transaction trails and hinder blockchain tracing.

Receiving funds from jurisdictions with weak AML frameworks significantly increases geographic risk, particularly when combined with other red flags.

By contrast, peer-to-peer infrastructure use and market volatility are inherent features of the virtual asset ecosystem and do not, on their own, indicate money laundering.

The combination of frequent address changes and a recent change in the ultimate beneficial owner raises potential red flags that warrant immediate investigation. To mitigate risk, the insurance company should investigate these changes and temporarily decline any payment or withdrawal instructions until the review is complete and appropriate steps are agreed upon. This ensures both regulatory compliance and protection against potential misuse of the policy.